By now, you’ve almost certainly heard of cryptocurrency. From Bitcoin to Ethereum to Dogecoin, it’s all over the news and social media. But do you actually understand what it is? If not, you’re not alone. Crypto can be confusing, so we’ll break it down for you here.
Basically, cryptocurrency is a kind of currency that can be used to purchase goods and services online. It might be helpful to think of it the way you’d think of arcade tokens or casino chips. In order to pay for things, you have to trade in the crypto for real currency. In addition to using it to buy things, people often invest in crypto, just as they’d invest in stocks or precious metals. There are over 5.000 different cryptocurrencies in circulation, with the most popular ones being Bitcoin and Ethereum, and their exchange rates are wildly disparate and extremely volatile.
Consider this: traditional investments, like real estate or shares in a business, are tied to something tangible. Cryptocurrencies, on the other hand, are purely digital. Their value is not based on producing anything, earning revenue, or hiring people, but rather on how many people are willing to invest in them. Therefore, purchasing crypto can be risky if you don’t spend enough time researching it.
Part of cryptocurrency’s appeal is that it’s decentralized, meaning it can exist outside the control of government or other centralized agencies. Despite this lack of regulation, it’s extremely secure, which adds to its allure. Crypto uses blockchain technology, an open, distributed ledger in which transactions are recorded in “blocks” linked together in a “chain” of cryptocurrency transactions. Everyone who uses crypto has their own copy of this “digital checkbook” so that there’s a globally unified transaction record. It’s a secure system because each transaction is checked, validated, and secured by cryptography.
Are you still confused? The good news is that you don’t need to fully understand crypto to use it. After all, you probably don’t understand all the ins and outs of currency values, but using your debit card is easy. It’s the same way with crypto once you have a vague grasp of the basics.
So, what does cryptocurrency have to do with mortgage loans? Well, if it’s converted to a normal bank account, it can be considered an asset. Talk to your mortgage broker about creative ways cryptocurrency can help you secure different types of mortgage loans for your new home.
If you’re interested in buying a home, First Coast Mortgage Funding is here to help. Committed to helping people in the First Coast region buy and refinance residential properties, we specialize in every kind of property. Over 70 years of combined experience has made us independent mortgage experts, and we offer creative solutions to help borrowers overcome roadblocks when trying to secure a loan. Our goal is to provide home loans to our clients at the lowest home loan interest rates and the best possible service. Contact us through our website or call 904.217.5450 for more information.